Spike in landlord exodus as buy-to-let market sours

The number of landlords exiting the rental market spiked in April as rents increased for many tenants, according to a report from letting agent professional body Arla Propertymark.

Arla Propertymark's private rented sector report found in April the number of landlords selling their buy-to-let properties reach its highest level since the survey began in 2015.

Those landlords that remained were raising rents, with the research finding the number of tenants experiencing rent hikes rose from 24 per cent to 26 per cent year-on-year in April.

The report, which surveyed 275 letting agents, found the number of landlords exiting the market rose to five per branch, up from four in March.

March had been the first time the number of selling landlords had risen in almost a year after sitting at three landlords per branch since April 2017.

The figures come after a series of legislative changes which have hit landlords, including a stamp duty surcharge on additional properties and a changes to mortgage relief.

David Cox, chief executive of Arla Propertymark, said the figures highlighted the need to build more homes.

He said: "The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the buy-to-let market is becoming increasingly unattractive to investors.

"Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred. This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes.

"As demand for private rented homes massively continues to outstrip supply, the government can no longer divert its attention from the broken housing market. The recent news that the government is regulating the industry is a step in the right direction, but ultimately we just need more homes."

The report also found demand from prospective tenants continued to rise, with letting agents seeing a 9 per cent increase in the number of tenants on their books during April - the strongest demand since September, alongside stagnating rental property supply.

Martin Stewart, founder, director and independent mortgage adviser at London Money Financial Services, said: "Buy-to-let in London is a dead parrot, there is no life in it. The numbers don't stack up for most landlords, more will leave the market in the next couple of years when the tax bills come in and they start to realise they are effectively subsidising tenants.

"I really do think there will be many a landlord leaving the market as buy-to-let is not the easy bandwagon they thought it was. There are many headwinds that make buy-to-let impossible to operate, especially in the south east.

"It will be interesting to see the impact on first-time buyers when the market is suddenly flooded with one bed flats - the buy-to-let monster was allowed to run unchecked for too long at the expense of first-time buyers."